Q4 2024 America's Car-Mart Inc Earnings Call

Operator: Good day, and thank you for standing by. Welcome to America's Car-Mart's fourth quarter fiscal year 2024 earnings call.

Unknown Attendee: Good day, and thank you for standing by. Welcome to America's Car-Mart 4th quarter fiscal year 2024 earnings call.

Good day, and thank you for standing by and welcome to America's car Mart fourth quarter fiscal year 2024 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session I need to press star one on your telephone you will then hear an automated message advising her hand this race to withdraw it.

Operator: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would like to have the confidentiality speaker today, Vickie Judy, America's Car-Mart CFO. Please go ahead.

Unknown Attendee: At this time, all participants are in a listen-only mode.

Unknown Attendee: After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again.

Unknown Attendee: Please be advised that these conferences are being recorded.

Your question. Please press star wouldn't want again, please be advised today's conference is being recorded I would now.

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Vickie Judy: Vickie Judy, America's Car-Mart CFO, please go ahead.

Speaker Change: The conference will be speakers Vickie, Judy America's car Mart's CFO. Please go ahead.

Vickie Judy: Good morning and welcome to America's Car-Mart 4th quarter fiscal year 2024 earnings call for the period ending April 30th, 2024. Joining me today is Doug Campbell, our company's president and CEO. We've issued our earnings release earlier this morning, and it is available on our website, along with the slide of supplemental material. We will post the transcript of our prepared remarks following this call, and the Q&A session will be available through the webcast after the call.

Vickie D. Judy: Good morning, and welcome to America's Car-Mart's fourth quarter fiscal year 2024 earnings call for the period ending April 30, 2024. Joining me today is Doug Campbell, our company's president and CEO.

Speaker Change: Good morning, and welcome to America's car Mart's fourth quarter fiscal year 2024 earnings call for the period ending April 30 of 2020 for joining me today is that Campbell, our company's president and C E O.

Vickie D. Judy: We issued our earnings release earlier this morning, and it is available on our website along with a slide of supplemental material. We will post the transcript of our prepared remarks following this call, and the Q&A session will be available through the webcast after the call. During today's call, certain statements we make may be considered forward-looking and inherently involve risk and uncertainties that could cause actual results to differ materially from management's present view.

Speaker Change: We've issued our earnings release earlier this morning and is available on our website along with the slide a supplemental material. We will post a transcript of our prepared remarks. Following this call and the Q&A session will be available through the webcast after the call.

Vickie Judy: During today's call, certain statements we make may be considered forward-looking and inherently involve risks and uncertainties that could cause actual results to differ materially from management's present views. These statements are made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. The company cannot guarantee the accuracy of any forecast or estimate, nor does it undertake any obligation to update such forward-looking statements.

Speaker Change: During today's call certain statements, we make may be considered forward looking and inherently involve risks and uncertainties that could cause actual results to differ materially from management's present view.

Vickie D. Judy: These statements are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. The company cannot guarantee the accuracy of any forecast or estimate, nor does it undertake any obligation to update such forward-looking statements. For more information, including important cautionary notes, please see Part 1 of the company's annual report on Form 10-K for the fiscal year ended April 30, 2023, and our current and quarterly reports furnished to or filed with the Securities and Exchange Commission on Forms 8-K and 10-Q. I will now turn it over to Doug for his perspectives on our business and strategies moving forward.

Speaker Change: These statements are made pursuant to the safe Harbor provision of the private Securities Litigation Reform Act of 1995 the.

Speaker Change: The company cannot guarantee the accuracy of any forecast or estimates nor does it undertake any obligation to update such forward looking statements for more information, including important cautionary note. Please see part one of the company's annual report on Form 10-K for the.

Vickie Judy: For more information, including important cautionary notes, please see Part 1 of the company's annual report on Form 10-K for the fiscal year ended April 30th, 2023, and our current and quarterly reports furnished to or filed with the Securities Exchange Commission on Form 8-K and 10-K.

Speaker Change: Fiscal year ended April 32023, and our current and quarterly reports furnished to or filed with the Securities Exchange Commission on forms 8-K and 10-Q.

Douglas Campbell: I will now turn it over to Doug for his perspectives on our business and strategies moving forward. Thank you, Vicki. And thank you, everyone, for your interest in America's Carmer and for joining us to hear more about our 4th quarter and full-year results. Our customer-focused associates are dedicated to helping our customers navigate life's challenges and did so throughout the last fiscal year, especially during the 4th quarter.

Speaker Change: I will now turn it over to Doug for his perspective on our business and strategy moving forward.

Douglas Campbell: And thank you everyone for your interest in America's Car-Mart and for joining us to hear more about our fourth quarter and full year results. Our customer-focused associates are dedicated to helping our customers navigate life's challenges and did so throughout the last fiscal year, especially during the fourth quarter. I'd also like to take a moment to acknowledge the associates and members of our community here in Northwest Arkansas who were devastated by the recent tornadoes that touched down here in Rogers and the surrounding areas.

Speaker Change: Vickie.

Doug: And thank you everyone for your interest in America's car Mart and for joining us to hear more about our fourth quarter and full year results are.

Speaker Change: Our customer focused associates are dedicated to helping our customers navigate likes challenges and did so throughout the last fiscal year, especially during the fourth quarter.

Douglas Campbell: I'd also like to take a moment to acknowledge the associates and members of our community here in Northwest Arkansas who were devastated by the recent tornadoes that touched down here in Rogers and the surrounding areas. Despite the personal hardships that many associates experienced, they didn't misbeade on serving our customers. We appreciate their tremendous dedication.

Speaker Change: I'd also like to take a moment to acknowledge associates and members of our community here in northwest Arkansas.

Speaker Change: We were devastated by the recent tornadoes that touched on here in Rogers and the surrounding areas.

Douglas Campbell: Despite the personal hardships that many associates experienced, they didn't miss a beat serving our customers. We appreciate their tremendous dedication. Let me start off with some perspective on the tax season. It was a slow start to the season, as refunds trailed about a week behind normal timing. From an industry perspective, overall demand was strong, and refunds were up just slightly for our consumers, which was good, despite the season being somewhat abbreviated.

Speaker Change: Despite the personal hardships that many associates experience they didn't miss a beat on serving our customers. We appreciate their tremendous dedication.

Douglas Campbell: Let me start off with some perspective on the tax season. It was a slow start to the season as Reefun's trailed about a week behind normal timing. From an industry perspective, overall demand was strong and Reefun's were up just slightly for our consumers, which was good despite the season being somewhat abbreviated. At Carmer, there was certainly consumer interest, as we had healthy website traffic. The fact that we carried about $20 million less in inventory to start the season certainly had an impact on our results. It was a challenge to balance operating leaner and capturing available demand.

Speaker Change: Let me start off with some perspective on the tax season.

Speaker Change: Slow start to the season as refunds trilled about a week behind normal timing from an industry perspective overall demand was strong and refunds were up just slightly for our consumers, which was good despite the season being somewhat abbreviated.

Douglas Campbell: At Car-Mart, there was certainly consumer interest, as we had healthy website traffic. However, the fact that we carried about $20 million less in inventory to start the season certainly had an impact on our results. It was a challenge to balance operating leaner and capturing available demand. Consumers continue to struggle with the economic pressures of covering basic living expenses and skyrocketing costs like auto insurance rates, which are now averaging 50% more when compared to just the same time period three years ago.

Speaker Change: A car Mart there was certainly consumer interest as we had healthy website traffic.

Speaker Change: The fact that we carried about $20 million less in inventory to start the season, certainly had an impact on our results. It was a challenge to balance operating leaner and capturing available demand.

Douglas Campbell: Consumers continue to struggle with the economic pressures of covering basic living expenses and skyrocketing costs like auto insurance rates, which are now average at 50% more when compared to just the same time period three years ago. We are identifying ways that we can help the consumer in this area due to its importance as part of overall car ownership. Sales were down 13.6% during the quarter, which was up against the highest ever quarterly sales volume for us as a company. I mentioned overall website traffic was healthy, but total application volume was down 9.8%. This is a function of a couple different dynamics, including a higher vehicle price and the 20 million dollars inventory less that we carry during the tax season.

Speaker Change: Consumers continue to struggle with the economic pressures of covering basic living expenses and skyrocketing cost like auto insurance rates, which are now averaging 50% more when compared to just at the same time period three years ago.

Douglas Campbell: We are identifying ways that we can help the consumer in this area due to its importance as part of overall car ownership. Sales were down 13.6% during the quarter, which was up against the highest ever quarterly sales volume for us as a company. As I mentioned, overall website traffic was healthy, but total application volume was down 9.8%.

Speaker Change: We are identifying ways that we can help the consumer in this area due to its importance as part of overall car ownership.

Speaker Change: Sales were down 13, 6% during the quarter, which was up against the highest ever quarterly sales volume for us as a company.

Speaker Change: I mentioned overall website traffic was healthy, but total application volume was down nine 8%.

Douglas Campbell: This is a function of a couple different dynamics, including a higher vehicle price and the $20 million in inventory less that we carried during the tax season. Conversely, I am pleased to see that we are closing the gap sequentially in sales from being down 19.6% in the third quarter to being down 13.6% this quarter. Continued progress and gross margin were a bright spot, with a 200-basis point increase over the prior year's quarter and a 120-basis point increase when comparing the full fiscal year's results.

Speaker Change: This is a function of a couple of different dynamics, including a higher vehicle price and the $20 million in inventory less that we carried during the tax season.

Douglas Campbell: Conversely, I'm pleased to see that we are closing the gaps sequentially in sales, from being down 19.6% in the third quarter to being down 13.6% this quarter. Continued progress and gross margin was a bright spot, with a 200 basis point increase over the prior year's quarter and a 120 basis point increase when comparing the full fiscal year's results. We're pleased that pricing discipline and improvements in transportation and vehicle repairs continue to drive increases in growth profit.

Speaker Change: Conversely, I am pleased to see that we are closing the gap sequentially in sales from being down 19, 6% in the third quarter to being down 13, 6% this quarter.

Speaker Change: Continued progress in gross margin was a bright spot with a 200 basis point increase over the prior year's quarter and 120 basis point increase when comparing the full fiscal years results.

Douglas Campbell: We're pleased that pricing discipline and improvements in transportation and vehicle repairs continue to drive increases in gross profit. Last quarter, we reported on the start of our partnership with Cox Automotive to drive efficiencies within our vehicle supply chain process. This initiative is centrally managed, removing the day-to-day burden from our dealership managers of processing and overseeing the disposal of our assets. We can leverage additional reconditioning opportunities through their infrastructure for Retail Vehicle Preparation.

Speaker Change: We're pleased that pricing discipline and improvements in transportation and vehicle repairs continue to drive increases in gross profit.

Douglas Campbell: Last quarter, we reported on the start of our partnership with Cox Automotive to drive efficiencies within our vehicle supply chain process. This initiative is centrally managed, removing the data date burden from our dealership managers of processing and overseeing the disposal of our assets. We can leverage additional reconditioning opportunities through their infrastructure for retail vehicle preparation. These can be future incremental drivers of gross margin and give us options to source more affordable vehicles at the point of disposal. It's early in the program, but we're already seeing favorability in the economics in these areas. This program has improved the operating efficiency of our wholesale process, including logistics flow.

Speaker Change: Last quarter, we reported on the start of our partnership with Cox automotive to drive efficiencies within our vehicle supply chain process.

Speaker Change: This initiative is centrally managed removing the day to day burden from our dealership managers are processing and overseeing the disposal of our assets.

Speaker Change: We can leverage additional reconditioning opportunities through their infrastructure.

Douglas Campbell: These can be future incremental drivers of gross margin and give us options to source more affordable vehicles at the point of disposal. It's early in the program, but we're already seeing favorability in the economics in these areas. This program has improved the operating efficiency of our wholesale process, including the logistics flow. These factors, and others, will contribute to having a better flow of affordable vehicles for our customers and give us the flexibility to scale up and down quickly, given the cyclicality of our business.

Speaker Change: For retail vehicle preparation.

Speaker Change: These can be future incremental drivers of gross margin and give us options to source more affordable vehicles at the point of disposal. It's early in the program, but we're already seeing favorability in the economics in these areas. This program has improved the operating efficiency of our wholesale process, including logistics flow. These factors and others will contribute to having a better flow of affordable vehicles.

Douglas Campbell: These factors and others will contribute to having a better flow of affordable vehicles for our customers and give us a flexibility to scale up and down quickly given the cyclicality of our business.

Speaker Change: For our customers and give us the flexibility to scale up and down quickly given the cyclicality of our business.

Douglas Campbell: We remain extremely focused on inventory improvements, and opportunities remain in optimizing inventory levels, pricing, and mix to meet sales demand. We've also just completed our first full quarter of LOS originations post-implementation. Approximately 85% of our sales for the quarter were on the new platform. The remaining 15% of originations outside LOS are primarily attributable to recently acquired stores where LOS has not been yet implemented. The LOS is allowing us to spend more time evaluating the characteristics of our applicants who didn't purchase a vehicle to inform us how we can serve more customers in the upcoming fiscal year.

Douglas Campbell: We remain extremely focused on inventory improvements, and opportunities remain in optimizing inventory levels, pricing, and mix to meet sales demand. We've also just completed our first full quarter of LOS Originations post-implementation. Approximately 85% of our sales for the quarter were on the new platform. The remaining 15% of originations outside LOS are primarily attributable to recently acquired stores where LOS has not yet been implemented.

Speaker Change: We remain extremely focused on inventory improvements and opportunities remain and optimizing inventory levels pricing and mix to meet sales demand.

We've also just completed our first full quarter of LLS originations post implementation.

Speaker Change: Approximately 85% of our sales for the quarter were on the new platform. The remaining 15% of originations outside <unk> are primarily attributable attributable to recently acquired stores, where <unk> has not been yet implemented.

Douglas Campbell: The LOS is allowing us to spend more time evaluating the characteristics of our applicants who didn't purchase a vehicle to inform us how we can serve more customers in the upcoming fiscal year. It is also providing additional data and insights on consumers to allow us to enhance our underwriting standards and identify opportunities for portfolio growth while mitigating risk. At year end, 20% of our overall portfolio was comprised of LOS origination. With the implementation completed and our store-level users becoming more proficient, we expect that our teams will realize more of its benefits during the current fiscal year.

Speaker Change: The <unk> is allowing us to spend more time evaluating the characteristics of our applicants who didn't purchase a vehicle to inform us how we can serve more customers in the upcoming fiscal year.

Douglas Campbell: It is also providing additional data and insights on consumers to allow us to augment our underwriting standards and identify opportunities for portfolio growth while mitigating risk. At year end, 20% of our overall portfolio was comprised of LOS originations. With the implementation completed and our store level users becoming more proficient, we expect that our teams will realize more of its benefits during the current fiscal year. However, it's been tremendously beneficial today. We've used it to curtail originating terms, generate better deal structures, and ultimately improve LOS rates.

Speaker Change: It is also providing additional data and insights on consumers to allow us to augment our underwriting standards and identify opportunities for portfolio growth while mitigating risk.

Speaker Change: At year end, 20% of our overall portfolio was comprised of <unk> originations.

Speaker Change: With the implementation completed in our store level, you're just becoming more proficient we expect that our teams to realize more of its benefits during the current fiscal year. However.

Douglas Campbell: However, it's been tremendously beneficial today. We've used it to curtail originating terms, generate better deal structures, and ultimately improve loss rates. On the last call, I was hesitant to speak directly to some of what we're seeing.

Speaker Change: However, it's been tremendously beneficial today.

Speaker Change: We've used it to curtail originating terms generate better deal structures and ultimately improved loss rates.

Douglas Campbell: On the last call, I was hesitant to speak directly to some of what we're seeing. It's now a fifth of the portfolio, and I think it merits some additional conversation. During the implementation, we isolated a quarter's worth of originations out of the old and new systems and been tracking the performance from both the originating pools. From a frequency standpoint, the LOS through enatement period is generating a 15% improvement in the number of losses taken. The severity of those losses has also improved by 9% due to stronger down payments and short originating terms. We see continued benefits around the reduction of losses or increase in sales volumes as we make adjustments to the system.

Speaker Change: On the last call I was hesitant to speak directly to some of what we're seeing.

Douglas Campbell: It's now a fifth of the portfolio, and I think it merits some additional conversation. During the implementation, we isolated a quarter's worth of originations out of the old and new systems and have been tracking the performance from both originating pools. From a frequency standpoint, the LOS, through an eight-month period, is generating a 15% improvement in the number of losses taken. The severity of those losses has also improved by 9% due to stronger down payments in short originating terms. The benefit of both frequency and severity is a 20% reduction in the cumulative net loss rate for these static pools.

Speaker Change: It is now a fifth of the portfolio and I think it merits some additional conversation.

Speaker Change: During the implementation, we isolated a quarters worth of originations out of the old and new systems have been tracking the performance from both originating pools.

Speaker Change: From a frequency standpoint, the LLS through an eight month period is generating a 15% improvement in the number of losses taken.

Speaker Change: The severity of those losses has also improved by 9% due to stronger downpayments ensure originating terms.

Speaker Change: The benefit of both the frequency and severity is a 20% reduction in the cumulative net loss rate for the static pools.

Douglas Campbell: While impressive, LOS originations are still only 20% of the portfolio. It's still early, but we expect to see continued benefits around the reduction of losses or increase in sales volumes as we make adjustments to the system. We continue to enhance our capabilities and technology to better position the company for long-term growth. In addition to LOS, our company invested significantly over the past three years in the design, training, and implementation of an enterprise resource planning system.

Speaker Change: Ill impressive allo S originations are still only 20% of the portfolio.

Speaker Change: It's still early but we expect to see continued benefits around the reduction of losses or increase in sales volumes as we make adjustments to the system.

Douglas Campbell: We continue to enhance our capabilities and technology to better position the company for long-term growth. In addition to LOS, our company invested significantly over the past three years in the design, training, and implementation of an enterprise resource planning system. The dynamics of this system conversion should prove to be foundational in improving efficiencies and operational flexibility within finance, accounting, and other customer management functions. These technologies also lay important groundwork for the support of future strategic growth. I mentioned that this would be completed within the calendar year. We went live on the system on May 1st and have closed out our first month of usage.

Speaker Change: We continue to enhance our capabilities and technology to better position the company for long term growth.

In addition to <unk>, our company invested significantly over the past three years and the design training and implementation of an enterprise resource planning system. The.

Douglas Campbell: The dynamics of this system conversion should prove to be foundational in improving efficiencies and operational flexibility within finance, accounting, and other customer management functions. These technologies will also lay important groundwork for the support of future strategic growth. I mentioned that this would be completed within the calendar year. We went live on the system on May 1st and have closed out our first month of usage. Like other initiatives, we will highlight the benefits over time, but this should aid in leveraging SG&A.

Speaker Change: The dynamics of this system conversion should prove to be foundational in improving efficiencies and operational flexibility within finance accounting and other customer management functions.

Speaker Change: These technologies will also laid important groundwork for the support of future strategic growth.

Speaker Change: I mentioned that this would be completed within the calendar year.

Speaker Change: We went live on the system on May one and have closed out our first month of usage like other initiatives will highlight the benefits over time, but this should aid in leveraging SG&A.

Douglas Campbell: Like other initiatives, we'll highlight the benefits over time, but this should aid in leveraging SGNA.

Douglas Campbell: On June 3rd, we closed the transaction we announced in early May to purchase Texas Auto Center. This is the largest acquisition in company history. We welcome the Texas Auto Center teams at their two locations in Austin and San Marcos, and we expect them to complement our footprint as we expand in Texas. We anticipate the acquisition to be meaningful in terms of driving revenue and generating net income for the fiscal years we build out our portfolio. Together with the acquisition in the third quarter of Central Auto Sales in Hot Springs, Arkansas, we expect these will generate annual revenues in excess of $60 million.

Douglas Campbell: On June 3rd, we closed the transaction we announced in early May to purchase Texas Auto Center. This is the largest acquisition in company history. We welcome the Texas Auto Center teams at their two locations in Austin and San Marcos, and we expect them to complement our footprint as we expand in Texas. We anticipate the acquisition to be meaningful in terms of driving revenue and generating net income for the fiscal year as we build out our portfolio.

Speaker Change: On June 3rd we closed the transaction, we announced in early May to purchase Texas Auto Center.

This is the largest acquisition in company history.

Speaker Change: We welcome the Texas Auto center teams at their two locations in Austin, and San Marcos and we expect them to complement our footprint as we expanded Texas.

Speaker Change: We anticipate the acquisition to be meaningful in terms of driving revenue and generating net income for the fiscal year as we build out our portfolio together.

Douglas Campbell: Together with the acquisition in the third quarter of Central Auto Sales in Hot Springs, Arkansas, we expect these will generate annual revenues in excess of $60 million. These acquisitions remain the best use of our capital and are a key driver for our overall growth strategy. Now I'll turn it over to Vickie for more details on our financials.

Speaker Change: Together with the acquisition in the third quarter of Central Auto sales in Hot Springs, Arkansas. We expect these will generate annual revenues in excess of $60 million. These.

Douglas Campbell: These acquisitions remain the best use of our capital and our key driver for our overall growth strategy.

Speaker Change: These acquisitions remain the best use of our capital and our key driver for our overall growth strategy.

Vickie Judy: Now I'll turn it over to Vicki for more details on our financials. Vicki. Thanks, Doug, and good morning, everyone.

Speaker Change: Now I will turn it over to Vicki <unk> for more details on our financials Vicky.

Vickie D. Judy: Thanks, Doug, and good morning, everyone. In my commentary, the comparison that I will cover will be the fourth quarter of fiscal 2024 versus the fourth quarter of fiscal 2023, unless otherwise noted. Total revenues decreased $22.3 million, or 5.8 percent, largely due to a decline in retail units sold. However, this was impacted positively by interest income being up 10.5% due to a $91.2 million increase in average finance receipts. Doug covered the pressures that our customers are facing, and these factors affected sales, with average units sold down from 37.7% to 33% or 12.5%. The average retail sales price was up 6.2%, with two-thirds of that attributable to vehicle prices and the remaining to increases in ancillary products.

Vicki: Thanks, Doug and good morning, everyone.

Vickie Judy: In my commentary, the comparison that I will cover will be the fourth quarter of fiscal 2024 versus the fourth quarter of fiscal 2023, unless otherwise noted. Total revenues decrease 22.3 million or 5.8 percent, largely due to a decline in retail units sold. However, this was impacted positively by interest income being up 10.5 percent due to a $91.2 million increase in average finance receivables. Doug covered the pressures that our customers are facing in these factors affected sales, with average units sold down from 37.7 to 33, or 12.5 percent. The average retail sales price was up 6.2 percent, with 2.3 of that attributable to vehicle price and the remaining to increases in answer products.

Vicky: In my commentary the comparison that I will cover will be the fourth quarter of fiscal 2024 versus the fourth quarter of fiscal 2023, unless otherwise noted.

Vicky: Total revenues decreased $22 3 million or five 8% largely due to a decline in retail units sold.

Vicky: However, this was impacted positively by interest income being up 10, 5% due to a $91 $2 million increase in average finance receivables.

Speaker Change: Doug covered the pressures that our customers are facing in these factors affected sales with average unit sell down from 37, 7% to 33 or 12, 5%. The average retail sales price was up six 2% with two thirds of that attributable to vehicle price and the remaining.

Vickie Judy: The gross profit dollars per retail unit improved by 12.2 percent as we continued to execute on our margin improvement strategy. I am pleased that we had improvements in gross profit throughout the fiscal year, and we expect continued improvements into fiscal year 2025. Doug spoke to the actions that have contributed to these results. Our mission remains to offer vehicles at affordable prices to our customers and help them be successful with their vehicle purchase and financing. We're focused on a procurement strategy to source lower priced units and access to affordable units through the re-conditioning effort. Execution on these items can deliver better results.

Vickie D. Judy: The gross profit dollars per retail unit improved by 12.2% as we continued to execute on our margin improvement strategy. I am pleased that we had improvements in gross profit throughout the fiscal year, and we expect continued improvements into fiscal year 2025. Doug spoke to the actions that have contributed to these results.

Increases in ancillary products.

Speaker Change: The gross profit dollars per retail unit improved by 12, 2% as we continued to execute on our margin improvement strategy.

Speaker Change: I am pleased that we had improvements in gross profit throughout the fiscal year and we expect continued improvements into fiscal year 2025.

Speaker Change: Doug spoke to the actions that have contributed to these results.

Vickie D. Judy: Our mission remains to offer vehicles at affordable prices to our customers and help them be successful with their vehicle purchase and financing. We're focused on a procurement strategy to source lower-priced units and access to affordable units through the reconditioning effort. Execution on these items can deliver better results.

Speaker Change: Our mission remains to offer vehicles at affordable prices to our customers and help them be successful with their vehicle purchase and financing we're focused on our procurement strategy to source lower priced units and access to affordable units through the reconditioning effort execution on these items can deliver better results.

Vickie Judy: LOS has allowed us to improve our deal structure with down payments of 40 basis points to 6.5%. Our originating term was 44 months, up sequentially and also up from last year's fourth quarter at 43.5 months. Even with our average price up over $1,100, we held the term to just a half-a-month increase. We're also pleased that the average retail price drops approximately $200. At the end of the fourth quarter, the weighted average total contract term for the portfolio is at 47.9 months. The weighted average age is 11.8 months, or up 18%. These results should lead to improved losses going forward.

Vickie D. Judy: LOS has allowed us to improve our deal structure with down payments up 40 basis points to 6.5%. Our originating term was 44 months, up sequentially and also up from last year's fourth quarter at 43.5 months. Even with our average price up over $1,100, we held the term to just a half a month increase. We're also pleased that the average retail price dropped sequentially by approximately $200. At the end of the fourth quarter, the weighted average total contract term for the portfolio is 47.9 months. The Weighted Average Age is 11.8 months, or up 18%.

Speaker Change: LLS has allowed us to improve our deal structure with down payments up 40 basis points to six 5%.

Speaker Change: Our originating term was 44 months up sequentially and also up from last year's fourth quarter at 43 five months.

Speaker Change: Even with our average price up over $1100. We held the term to just to have a month increase.

Speaker Change: We're also pleased that the average retail price dropped sequentially approximately $200.

Speaker Change: At the end of the fourth quarter the weighted average total contract term for the portfolio is at 47 nine months.

Speaker Change: The weighted average age is 11 eight months or up 18%. These results should lead to improved losses going forward.

Vickie D. Judy: These results should lead to improved losses going forward. Our local dealer teams remain laser-focused on collections, which increased 5% over last year's fourth quarter. The monthly average total collected per active customer rose 3.6% to $607 from $586. Customers appreciate mobile technology, but our hybrid approach to the business with the face-to-face relationship is a difference maker when they need contract modifications or personalized assistance.

Vickie Judy: Our local dealer teams remain laser focused on collections, which increased 5% over last year's fourth quarter. The monthly average total collected per active customer rose 3.6% to $607 from $586. Customers appreciate mobile technology, but our hybrid approach to the business with the face-to-face relationship is a difference maker when they need contract modifications or personalized assistance. Net charge-offs as a percentage of average finance receivables were 7.3% compared to 6.3%. Seasonally, we generally see greater losses in Q4, and that was true in the current year. Frequency accounted for approximately 58% of the loss. Our customers continue to face pressures on higher average cost of everyday items, and that covered the impact that car insurance is having on their budget.

Speaker Change: Our local dealer teams remain laser focused on collections, which increased 5% over last year's fourth quarter.

Speaker Change: Monthly average total collected per active customer rose three 6% to $607 from $586.

Speaker Change: Customers appreciate mobile technology that our hybrid approach to the business with the face to face relationship is a difference maker when they make contract modifications or personalized assistance.

Vickie D. Judy: Net charge-offs as a percentage of average finance receivables were 7.3% compared to 6.3%. Seasonally, we generally see greater losses in Q4, and that was true in the current year. Frequency accounted for approximately 58% of the loss.

Speaker Change: Net charge offs as a percentage of average finance receivables were seven 3% compared to six 3%.

Speaker Change: Seasonally we generally see greater losses in Q4 and that was true in the current year freak.

Speaker Change: Frequency accounted for approximately 58% of the loss R.

Vickie D. Judy: Our customers continue to face pressures on higher average costs for everyday items, and Doug covered the impact that car insurance is having on their budgets. This environment forces customers to have to spread their money across numerous demands, leading to a higher frequency of default. Our goal is to keep our delinquency percentage low and work with customers to resolve payment delinquencies before repossessing a vehicle. Our delinquencies, or accounts over 30 days past due, improved by 50 basis points to 3.1% at quarter end.

Speaker Change: Our customers continue to face pressures on higher average cost of everyday items and that cover the impact that car insurance is having on their budget.

Vickie Judy: This environment forced customers to have to spread their money across numerous demands, leading to a higher frequency of defaults. Our goal is to keep our delinquency percentage low and work with customers to resolve payment delinquencies before repossessing a vehicle. Our delinquencies or accounts over 30 days past due improved by 50 basis points to 3.1% at quarter end. The results we're seeing from our LOS originations were the primary driver and a 42 basis point improvement in our allowance for credit losses, which now sits at 25.32% at quarter end. We've been sharing our cash on cash returns profile during this past fiscal year, and we're pleased that our originated contracts in the fourth quarter are expected to produce cash on cash returns of 69.5%.

Speaker Change: This environment forced customers to have to spread their money across numerous demand leading to a higher frequency of default.

Hello: Our goal is to keep our delinquency percentage, Hello, and work with customers to resolve payment delinquencies before repossessing a vehicle.

Hello: Our delinquencies are accounts over 30 days past due improved by 50 basis points to three 1% at quarter end.

Vickie D. Judy: The results we're seeing from our LOS originations were the primary driver of a 42 basis point improvement in our allowance for credit loss, which now sits at 25.32% at quarter end. We've been sharing our cash-on-cash-returns profile during this past fiscal year, and we're pleased that our originated contracts in the fourth quarter are expected to produce cash-on-cash-returns of 69.5%. The focus on better quality originations and deal structures will continue to help us maximize these cash-on-cash returns. This material is included in our news release and supplemental slides.

Hello: The results were seeing from our LLS originations were the primary driver and a 42 basis point improvement in our allowance for credit losses, which now sits at $25 three 2% at quarter end.

We've been sharing our cash on cash returns profile. During this past fiscal year and we're pleased that our originated contracts in the fourth quarter are expected to produce cash on cash returns of 69, 5%.

Vickie Judy: The focus on better quality originations and deal structures will continue to help us maximize these cash on cash returns.

Hello: Focus on better quality originations and deal structures will continue to help us maximize these cash on cash returns.

Vickie Judy: This material is included in our news release and supplemental slide. Moving to SGNA, SGNA expense with $44.5 million and improvement of $1.3 million primarily due to operational improvements and cost-cutting measures implemented during the fiscal year. Over the last five years, we've averaged over 12 percent annual increases in SG&A dollars. The efforts put forth during the last fiscal year generated the lowest percentage change in annual SG&A in over five years at just 1.5 percent increase. This demonstrates our commitment to improving expense efficiency, especially in a higher inflationary environment. While we've made progress, any business is going to have expense headwinds on an annual basis across a variety of areas.

Hello: This material is included in our news release and supplemental slide.

Vickie D. Judy: Moving to SG&A, SG&A expense was $44.5 million, an improvement of $1.3 million, primarily due to operational improvements and cost-cutting measures implemented during the fiscal year. Over the last five years, we've averaged over 12% annual increases in SG&A dollars. The efforts put forth during the last fiscal year generated the lowest percentage change in annual SG&A in over five years at just 1.5% increase.

Hello: Moving to SG&A SG&A expense was $44 5 million, an improvement of $1 $3 million.

Hello: Primarily due to operational improvements and cost cutting measures implemented during the fiscal year.

Hello: Over the last five years, we've averaged over 12% annual increases in SG&A dollars.

Hello: First put forth during the last fiscal year generated the lowest percentage change in annual SG&A in over five years at just one 5% increase.

Vickie D. Judy: This demonstrates our commitment to improving expense efficiency, especially in a higher inflationary environment. However, while we've made progress, any business is going to have extensive headwinds on an annual basis across a variety of areas. However, we feel confident that we have line of sight to opportunities that will allow us to be well below the historical annual increase. Interest expense increased $4.9 million or 38.2% due to a rise in rates and secondarily an increase in debt.

Hello: Demonstrates our commitment to improving expense efficiency, especially in a higher inflationary environment.

Hello: While we've made progress any business is going to have expense headwinds on an annual basis across a variety of areas. However, we feel confident that we have line of sight to opportunities that will allow us to be well below the historical annual increases.

Vickie Judy: However, we feel confident that we have line of sight to opportunities that will allow us to be well below the historical annual increases. Interest expense increased 4.9 million, or 38.2 percent, due to a rise in rates and secondarily an increase in debt. On an annual basis, interest expense was up 27 million dollars. As of April 30, we have 5.5 million dollars in unrestricted cash and approximately 73.4 million dollars in additional availability under our revolving credit facilities, calculated on our year-end borrowing base of receivables and inventory. Our non-recourse securities notes represent the bulk of our funding and our fixed rate.

Hello: Interest expense increased $4 9 million or 38, 2% due to a rise in rates and secondarily an increase in debt on.

Vickie D. Judy: On an annual basis, interest expense was up $27 million. As of April 30, we had $5.5 million in unrestricted cash and approximately $73.4 million in additional availability under our revolving credit facilities calculated on our year-end borrowing base of receivables and inventory. Our non-recourse, securitized notes represent the bulk of our funding and our fixed rate, while the cost of funds fluctuates with the level of interest rates on our revolving credit agreements. Before I close, I'd like to point out some of our full-year highlights covered in the release this morning.

Hello: On an annual basis interest expense was up $27 million.

Hello: As of April 30th we have $5 $5 million in unrestricted cash and approximately $73 4 million and additional availability under our revolving credit facility as calculated on our year end borrowing base of receivables and inventory.

Hello: Our nonrecourse securitized notes represent the bulk of our funding and our fixed rate while cost of funds fluctuate with the level of interest rates on our revolving credit agreement.

Vickie Judy: While cost of funds fluctuates with the level of interest rates on our revolving credit agreement.

Vickie Judy: Before I close, I'd like to point out some of our full-year highlights covered in the release this morning. While revenue was down slightly, 50 basis points for the year due to lower unit volume, we were pleased with our 120 basis points increase in gross margin and progress on reducing SG&A per average account, as well as total collections increasing 9.2 percent. As you heard, we believe the implementation of our technology initiatives, including LOS, will position us well for fiscal 2025. We remain committed to growth through strategic acquisitions and prudent financial management. Our steadfast dedication to keeping customers on the road will lead to long-term shareholder value.

Hello: Before I close I'd like to point out some of our full year highlights covered in the release. This morning, while revenue was down slightly 50 basis points for the year due to lower unit volume.

Vickie D. Judy: While revenue was down slightly, 50 basis points, for the year due to lower unit volume, we were pleased with our 120 basis points increase in gross margin and progress on reducing SG&A per average account, as well as total collections increasing 9.2%. As you heard, we believe the implementation of our technology initiatives, including LOS, will position us well for fiscal 2025. We remain committed to growth through strategic acquisitions and prudent financial management. Our steadfast dedication to keeping customers on the road will lead to long-term shareholder value. Now, let me turn things back to Doug.

Hello: We were pleased with our 120 basis points increase in gross margin and progress on reducing SG&A per average account as well as total collections, increasing nine 2%.

Hello: As you heard we believe the implementation of our technology initiatives, including LLS will position us well for fiscal 2025, we remain committed to growth through strategic acquisitions and prudent financial management.

Speaker Change: Our steadfast dedication to keeping customers on the road will lead to long term shareholder value now, let me turn things back to that.

Douglas Campbell: Now, let me turn things back to Doug. Thanks, Vicki. In previous calls, I reiterated the importance of LOS, and I want to mention how we're providing additional expertise in optimizing a growing portfolio. Last week, we welcomed our new Chief Credit and Risk Officer to help us with these efforts. He has over 20 years experience in auto lending, with experience managing portfolios ranging in size from $100 million to $70 billion.

Douglas Campbell: Thanks, Vickie. In previous calls, I reiterated the importance of LOS, and I want to mention how we're providing additional expertise in optimizing a growing portfolio. Last week, we welcomed our new Chief Credit and Risk Officer to help us with these efforts. He has over 20 years of experience in auto lending, with experience managing portfolios ranging in size from $100 million to $70 billion.

Speaker Change: Thanks Vicki.

Vicki: In previous calls I reiterated the importance of <unk> and I want to mention how we're providing additional expertise in optimizing a growing portfolio.

Vicki: Last week, we welcomed our new chief credit and risk officer to help us with these efforts.

Vicki: Has over 20 years experience in auto lending with experienced managing portfolios ranging in size from $100 million to $70 billion.

Douglas Campbell: Before I kick off to an A, let me go back to the start of my 10 years as CEO in October. My goals then were to complete the rollout of several large-scale technology projects. Like LOS, ERP, and CRM, which are completed and already delivering benefits. The second was to have better cost discipline across the business, which Vicki talked about earlier, and there's other things that we can and will do here. The third was the prudent deployment of capital, which includes performance managing our locations and identifying attractive acquisition opportunities, two of which we've closed on in the last eight months.

Douglas Campbell: Before we kick off Q&A, let me go back to the start of my tenure as CEO in October. My goals then were to complete the rollout of several large-scale technology projects, like L.O.S., E.R.P., and C.R.M., which are completed and already delivering benefits. The second was to have better cost discipline across the business, which Vickie talked about earlier, and there are other things that we can and will do here. The third was the prudent deployment of capital, which includes performance managing our locations and identifying attractive acquisition opportunities, two of which we closed on in the last statement. I'm pleased that we've accomplished these goals because they lay the groundwork for what our teams now need to do to move forward. Fiscal year 2025 started on May 1st and is well underway.

Vicki: Before we kick off Q&A, let me go back to the start of my tenure as CEO in October.

Vicki: My goals and work to complete the rollout of several large scale technology projects like Allo S ERP and CRM.

Vicki: Which are completed and already delivering benefits.

Vicki: The second was to have better cost discipline across the business.

Speaker Change: Which I think you talked about earlier and there's other things that we can and will do here.

Speaker Change: The third was the prudent deployment of capital.

Speaker Change: Which includes performance managing our locations and identifying attractive acquisition opportunities.

Speaker Change: Two of which we've closed on in the last eight months.

Douglas Campbell: I'm pleased that we've accomplished these goals because they laid the groundwork for what our teams now need to do to move forward. This school year 2025 started on May 1st and is well underway. Our management team is focused on value creation for our shareholders, with improvements in volume, margins, cost efficiencies, and returns.

I am pleased that we have accomplished these goals because they lay the groundwork for what our teams now need to do to move forward.

Speaker Change: Fiscal year 2025 started on May 1st Venezuela underway, our management team is focused on value creation for our shareholders with improvements in volume margins cost efficiencies and returns.

Douglas Campbell: Our management team is focused on value creation for our shareholders with improvements in volume, margins, cost efficiencies, and returns. We're excited about our future and are engaging the execution of five key areas. One, operational excellence as we leverage our technology and systems recently installed. Number two, improved affordability for our core customers by reducing the average selling price during the fiscal year. 3. The continued optimization of our new loan origination system. 4.

Douglas Campbell: We're excited about our future and are engaging the execution of five key areas. One, operational excellence as we leverage our technology and systems recently installed. Number two, improved affordability for our core customers by reducing the average selling price during the fiscal year. Three, the continued optimization of our new loan origination system. Four, the capitalized on our new partnership with Cox Automotive. And lastly, continued investments in acquisitions. We look forward to executing on our strategic plan to differentiate America's Car-Mart and the marketplace with competitive advantages for serving many more customers and improving shareholder returns long term.

Speaker Change: We're excited about our future and are engaged in the execution of five key areas one.

Speaker Change: Operational excellence as we leverage our technology and systems recently installed.

Speaker Change: Number two <unk>.

Speaker Change: Improved affordability for our core customers by reducing the average selling price during the fiscal year.

Speaker Change: Three.

Speaker Change: The continued optimization of our new loan origination system.

Douglas Campbell: Capitalize on our new partnership with Cox Automotive. And lastly, continued investments in acquisitions. We look forward to executing on our strategic plan to differentiate America's Car-Mart in the marketplace with competitive advantages for serving many more customers and improving shareholder returns over the long term. Operator, please provide instructions for the Q&A. Thank you, ladies and gentlemen. If you have a question.

Speaker Change: Four to capitalize on our new partnership with Cox automotive.

Speaker Change: And lastly continued investments and acquisitions.

Speaker Change: We look forward to executing on our strategic plan to differentiate America's car Mart in the marketplace with competitive advantages for serving many more customers and improving shareholder returns long term.

Unknown Attendee: Operator, please provide instructions for the Q&A. Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 1-1 on your telephone. If your question has been answered or seen with yourself from the Q, please press star 1-1 again. We'll pause for a moment while we compile our Q&A roster.

Speaker Change: Operator, please provide instructions for the Q&A.

John J. Rowan: Just quickly, what is the current store count? I just want to make sure I have it correct with the new additions.

Operator: Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 1 1 on your telephone. If your question has been answered or you're still with yourself from the queue, please press star 1 1 again. We'll pause for a moment while we compile our Q&A list. Our first question comes from John Rowan on behalf of J.D. Montgomery Scott. Your line is open.

Speaker Change: Thank you ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone. If your question has been answered or sticking with yourself from the queue. Please press star one again.

Speaker Change: We'll pause for a moment, while we compile the Q&A roster.

John Rowan: Our first question comes from John Rowan with JD Montgomery Scott. Your line is open. Good morning.

Speaker Change: Our first question comes from John Rowan with Janney Montgomery Scott Your line is open.

John J. Rowan: Good morning.

John Rowan: Just quickly, what is the current store count? I should make sure I have it correct with the new additions. 154.

John J. Rowan: Good morning, just quickly what was what is the current store count I want to make sure I have it correct.

Douglas Campbell: 154. I'm sorry. What was that? 154.

Speaker Change: With the with the new additions.

John Rowan: I'm sorry, what was that? 154.

Speaker Change: Yes, the 254, I'm, sorry, what was that 154.

Douglas Campbell: 154. That includes the recently acquired locations, correct?

John Rowan: That includes the recently acquired locations, correct?

Speaker Change: $1 54.

Speaker Change: That includes the recently acquired locations correct.

John Rowan: Well, we closed on 1 in December, so it would close that one, the Central Auto Sales, the Texas Auto Center, where we acquired two locations that didn't close until June. So those would be additive to that 154.

Douglas Campbell: Well, we closed on one in December, so it would close that one, Central Auto Sales. The Texas Auto Center, where we acquired two locations, didn't close until June, so those would be added to that $154.

Speaker Change: We closed on one in December so it would close that one of the central auto sales the Texas Auto Center, where we acquired two locations that didn't close until June so those would be additive to that $1 54.

Vickie D. Judy: Okay, so, okay, um, and then can you go over it again? I may have missed it, and kind of the differences in the loss content between severity and frequency.

John Rowan: Okay, so, okay.

John Rowan: I think you should go over again. I may have missed it just kind of the differences in the lost content between severity and frequency. Yeah, for the quarter, the frequency was about 58% of the change in the provision there. So we're seeing higher frequency, and we saw that throughout the year. I think in the second quarter, we particularly mentioned severity, but overall, throughout the year, frequency was the largest driver of the losses. Okay.

Speaker Change: So okay.

Speaker Change: And then can you just go over again I may have missed it just kind of the differences in the loss content between severity and frequency.

Vickie D. Judy: Yes, for the quarter, the frequency was about 58% of the change in the provision there. So we're seeing higher frequency, and we saw that throughout the year. I think in the second quarter, we particularly mentioned severity, but overall, throughout the year, frequency was the largest driver of the losses.

Speaker Change: Yes for the quarter the frequency was.

Speaker Change: About 58%.

Speaker Change: The change in the provision there.

Speaker Change: So we're seeing higher frequency and we saw that throughout the year.

Speaker Change: I think in the second quarter, we particularly mentioned severity, but overall throughout the year frequency was the largest driver of the losses.

John J. Rowan: Okay, all right. Thank you very much. Again, ladies and gentlemen, if you have a question or a comment,

John Rowan: All right. Thank you very much.

Speaker Change: Alright, Thank you very much.

Unknown Attendee: Again, ladies and gentlemen, if you have a question or a comment at this time, please press star one on your telephone.

Speaker Change: Yes.

Speaker Change: Again, ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone.

Unknown Attendee: Once again, ladies and gentlemen, if you have a question or a comment at this time, please press star one on your telephone.

Operator: Again, ladies and gentlemen, if you have a question or a comment at this time, please press star 1-1 on your telephone. Once again, ladies and gentlemen, if you have a question or a comment at this time, please press star 1-1 on your telephone. And I'm not showing any further requests at this time. I turn the call back to Doug for any closing remarks.

Speaker Change: Once again, ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone.

Unknown Attendee: And I'm not showing any further questions at this time.

Douglas Campbell: I turn the call back to Doug for any closing remarks. Thanks, Operator. We appreciate the thoughtful question. Affordability continues to be a challenge for our industry. The technology that we've invested in over the last several years has laid the foundation for a future of being a leader in operating efficiency. And having a more digitized offering for our customers, really thrilled about the expansion in Texas with a new acquisition of Texas Auto Center and others like this to come. Our management team and board are committed to actions like these that'll drive shareholder value.

Speaker Change: And I'm not showing any further question at this time I'd like to turn the call back to Doug for any closing remarks.

Douglas Campbell: We appreciate the thoughtful question. Affordability continues to be a challenge for our industry. The technology that we've invested in over the last several years has laid the foundation for our future of being a leader in operating efficiency and having a more digitized offering for our customers. We're really thrilled about the expansion in Texas with the new acquisition of Texas Auto Center and others like this to come. Our management team and board are committed to actions like these that will drive shareholder value. Thank you again for your interest in our company.

Doug: Thanks, operator.

Doug: We appreciate the thoughtful question.

Doug: Affordability continues to be a challenge for our industry with technology that we've invested in over the last several years has laid the foundation for our future of being a leader in operating efficiency.

Speaker Change: Having a more digitized offering for our customers really thrilled about the expansion in Texas with a new acquisition of Texas Auto Center and others like this to come.

Speaker Change: Our management team and board are committed to actions like these that will drive shareholder value. Thank you again for your interest in our company.

Douglas Campbell: Thank you again for your interest in our company.

Operator: Ladies and gentlemen, this concludes today's presentation. You may now disconnect and have a wonderful day.

Unknown Attendee: Well, ladies and gentlemen, that concludes today's presentation. You may now just connect and have a wonderful day.

Speaker Change: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.